Another Volatile Week Despite Weekly Gain!

The market managed a respectable weekly gain of 2.2%, but it was far from easy. Volatility spiked once again late in the week due to market declines on Thursday and Friday. The market had gained as much as 5.5% in a strong recovery before declines set in on the final two trading days. The European bailout package was announced over the weekend and the market initially responded well. However, by Thursday concerns began to grow and nervousness set in. The spike in volatility seems a bit overdone. There appears to be a great deal of speculative trading over the short term which is causing significant market swings. Those swings add to the volatility and fear in the marketplace. On this side of the Atlantic, the economy has been slowing improving, a market that is undeserving of the volatility currently experienced. We expect current fears and nervousness to subside once we get through the near term panics over Europe. In addition, money flows from mutual funds to stocks has grown over the past few months, a trend that we expect to gain steam over coming months. Long term, those inflows to stocks will drive the market higher. In that light, the dips we see from current market swings represent excellent buying opportunities.

Momentum And Value (MAV Screen): Breakout Stocks To Buy!

What Stock Tips do we have? For this week, we have five stocks on our Breakout list. We wrote about Providence SVC Corp (PRSC, Personal Services) and Industrial SVCS (IDSA, Waste Management) in our newsletter last week. We cautioned that investors should wait for the May 10 earnings report on IDSA before investing. That turned out to be a great tip as the stock dropped 12% for the week despite meeting earnings expectations. No doubt that the skittish markets played some part in that decline. However, we have kept IDSA on our watch list as we think the pullback from last week creates a buying opportunity. Two others, Rosetta Stone (RST, Software) and Amerigroup (AGP, Healthcare Facilities) have been on our watch list for some time. We also added one new stock, IMPAX Laboratories (IPXL, Biotechnology & Drugs). IPXL is a specialty pharmaceutical company that is focused on the development and commercialization of generic and brand-name pharmaceuticals. The company blew the lid off their recent quarterly earnings announcement and Return on Equity comes in at an astronomical 68%. Growth rates are outstanding and valuation remains excellent with a PE of just 7. The stock can be a little rocky, but the rewards could be outstanding for those that can ride out the bumps. We also still consider Sturm Ruger a strong buy, but have removed that one from the breakout list since our purchase last week. The market has been showing a lot of volatility lately and that creates buying opportunities. Long term the market will finish higher so take advantage of market dips and buy, buy, buy.